Elia Group Hybrid bond generates strong demand
Today Elia announced a €900m perpetual subordinated bond at 4.75% with first call date on 5/5/31. The coupon is fixed till first reset date after 5.25y on 5/8/31. Thereafter resets every 5 yrs at Mid-Swap rate + Margin + step-up. First step-up is 25bps on 5/8/36 and second is 75bps on 5/8/51. At last Years's capital increase, Elia estimated a remaining Equity need of 1.8-2.3bn to finance the 2025-28 Capex needs of 26.8bn. We calculate that this issue reduces the equity needs by €450m (50% Equity Content). Given a BB+ S&P-rating for the issue and Initial Price Thoughts at 5.25%, the 4.75% is a good result for the large €900m size. The deal was initially announced at “Benchmark” (>€500m). The previous €500m hybrid bond (March'23) priced at 5.85%. We like that Elia is now acting with “pre-emptive” strikes from its equity toolbox. The AGM on 19/5 could bring more tools the management can use as the sentiment around TSO's benefits from the geo-political turmoil and AI power needs at the same time. Results on 20/5.Elia System Operator develops, operates and maintains very-high-voltage (380 kV, 220 kV and 150 kV) and high-voltage (70 kV, 36 kV and 30 kV) networks, providing its customers with consultancy and engineering services. Whether in Belgium, Germany or elsewhere in Europe or the U.S., Co. ensures that electricity flows reliably from energy producers to distributors and large corporate customers. Co.'s main activities include transmission operator, system operator and market facilitator, developing and maintaining grid infrastructure, connecting electrical installations to grids, providing transparent access to grids, while taking initiatives to improve electricity market operations.
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